Happy Inc. had a balance of $ 200,000 in its Retained Earnings on December 31, 2

Question

Happy Inc. had a balance of $ 200,000 in its Retained Earnings on December 31, 2016. During 2014, they provide the following data: Income from continuing operations before taxes were $ 75,000 in 2017. There was a loss from discontinued item of $ 10,000 before taxes. Preferred shares outstanding 20,000. Preferred dividends declared $ 10,000. Preferred dividends paid $ 7,000 Common shares outstanding 25,000. Common dividends declared and paid$ 15,000 During 2014, Happy changed their inventory method from FIF0 to weighted average. The cumulative effect of the change for prior years was an increase in ending inventory of $ 12,000. The current year's income reflects the new method Happy changed their estimate of the life of their equipment from 10 years to 12 years. The cumulative effect of this change was $ 18,000. The current year's income reflects the new estimate. 1. 2. 3. 4. 5. 6. Depreciation expense was understated by $ 5,000 in 2015 7. The tax rate is 30% Provide: a. b. c. EPS for 2017 The adjusting balance of Retained Earnings on January 1, 2017 The ending balance of Retained Earnings

Explanation / Answer

EBT from continuing Ops 75000 loss from discountinued Ops -10000 EBT 65000 TAX @30% 19500 PAT 45500 Dividend to preferred shareholders 10000 Earnings for common shareholders 35500 Common shares 25000 EPS (earning/no of shares) 1.42 Dividend to common shareholders 15000 Retained earnings 20500 Adjusments FIFO adjustment 12000 Tax impact 8400 Inventory revaluations -5000 Tax impact -3500 Overall adjustments 4900 Adjusted retained earnings 15600

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.